What is auto insurance?

Auto insurance is an agreement between you and your insurance company that can cover your car, damages you cause if you hit someone else, and other events. When you get car insurance, you're buying "coverages," which are essentially things your insurer agrees to pay for.

In a nutshell: It's like paying a little now to avoid potentially paying a lot later.

How does car insurance work?

When you buy insurance, your insurer or agent will ask some pretty basic questions about you and your car, and then you'll have some options when picking coverages. All of these factors impact your price. Generally, more coverage means a higher price. Then if you have damages or something happens, you can file a “claim” with your insurer–that's just an insurance term for asking the company to pay for something. If it's covered, your insurer will then pay for the damages or losses up to certain limits.

Generally, more coverage means a higher price.

Do I need car insurance?

Car insurance is required in all states, except New Hampshire (New Hampshire still requires financial responsibility if you cause an accident, so you'll still want to be properly insured). If you drive without insurance, you could get a fine, have your license revoked, or even go to jail. Don't panic! If you buy with Progressive, we won't ever sell a policy that doesn't meet your state's requirements. And yes, most other insurers will do the same.

How to get car insurance

At Progressive, you can buy a policy and usually activate it the very same day. You can even print your proof of insurance or download it to your phone in most states. Insurers offer various ways to purchase insurance; here's how you can buy insurance through Progressive (prices can vary depending on how you buy):

Damages to your car from accidents

Damage to your car from uninsured drivers

Uninsured/underinsured motorist property damage: About 13% of drivers are uninsured countrywide, according to the National Association of Insurance Commissioners. If a driver without insurance (or one without enough insurance) hits your vehicle this coverage kicks in.

Your injuries

Medical payments or personal injury protection (PIP): These are similar coverages. Medical payments coverage is offered in most states, while PIP is available only in the states that require it to be offered. Basically any time a car causes injuries, these coverages will both pay for:

Medical bills if you or your passengers are injured in a car accident (no matter who is at fault)

Medical bills if you or your family members are injured when riding in someone else's car or walking/riding a bike

PIP, which varies by state, is a bit broader and may cover other losses such as funeral expenses, lost wages, and rehab costs.

Your injuries from uninsured drivers

Uninsured/underinsured motorist bodily injury: Similar to its cousin coverage (uninsured/underinsured motorist property damage) but instead pays for injuries and lost wages.

Your out-of-pocket costs

Deductible: It's a common misconception that if you have car insurance, you don't ever have to pay for anything. Unfortunately, no insurer can promise that. All insurers have deductibles for a few coverages. Your deductible is simply the amount you have to pay for repairs or claims (your out-of-pocket costs).

For example, you have a $200 deductible, hit a telephone pole, and your car repairs cost $2,000. You'd pay $200, and your insurer would pay the rest. You can pick your deductible amount.

Lower deductible = higher rater, higher deductible = lower rate

The higher your deductible, the more of the repair or claim cost you'll have to take on. That means your out-of-pocket costs will be higher, but you'll have a lower overall rate and vice versa.

Extra coverages

These are the extra coverages that are affordable to add:

Rental car fees

Rental car reimbursement: Pays rental car fees while your car is being repaired. This is important because getting a rental car can be expensive, as the average repair at Progressive takes 13 days and the cost (across the rental industry) can go up to $120 a day, according to USA Today.

Your loan if you total your car

Gap coverage: Also called loan/lease payoff and helps pay off your car loan if you total your car. It pays off the "gap" between what your car is worth and how much is left on your loan.

How car insurance is priced

Insurance companies consider a bunch of different factors, but they're really trying to answer two key questions: How likely are you to be in an accident and how much will it cost? Here are a few of the specifics insurers consider:

Safe driver: No (or few) accidents means you're less likely to have one in the future.

No speeding tickets: The slower you go, the less likely you are to have an accident.

Your car's value: A cheaper car costs less to repair.

Age: More experience behind the wheel means you're less likely to have an accident. Your rate will usually go down as you get older, though some insurers may begin to increase rates for older drivers once they reach a certain age, such as 70.

Please note: The above content is meant as general information to help you understand the different aspects of insurance. This information is not an insurance policy, does not refer to any specific insurance policy, and does not modify any provisions, limitations, or exclusions expressly stated in any insurance policy. Descriptions of all coverages and other features on this page are necessarily brief; in order to fully understand the coverages and other features of a specific insurance policy, we encourage you to read the applicable policy and/or speak to an insurance representative. Coverages and other features vary between insurers, vary by state, and are not available in all states. Whether an accident or other loss is covered is subject to the terms and conditions of the actual insurance policy or policies involved in the claim. References to average or typical premiums, amounts of losses, deductibles, costs of coverages/repair, etc., are illustrative and may not apply to your situation. We are not responsible for, nor do we endorse or approve, the content of any third party sites linked from this page. Access to such sites is being provided for informational purposes only.